The IRS has issued the estate and gift tax limits for 2017 (Rev. Proc. 2016-55). If a person dies in 2017, the first $5,490,000 of their estate is exempt from federal estate tax. This means that no federal estate tax will be imposed if his or her gross estate is less than $5,490,000. The basic exclusion amount for 2017 was adjusted for inflation up from the 2016 amount of $5,450,000.
Therefore, with proper estate planning, an individual could transfer up to $5,490,000, or a married couple could transfer up to $10,980,000, to their children or other family members without paying federal estate tax.
In 2017, each person can gift up to $14,000 to any person without reporting the gift to the IRS, without using any of the $5,490,000 lifetime gift tax exemption, and without paying gift tax. Gifts to a spouse who is a US citizen are not restricted by this $14,000 limitation. For gifts to a spouse who is not a United States citizen, the first $149,000 of gifts are not included in the total amount of taxable gifts that must be reported to the IRS.
Other gifts not restricted by the $14,000 limitation include qualified gifts paid directly to institutions for educational or medical purposes. A qualified gift would include direct payment to a college or university for another person’s tuition or direct payment to a hospital for another person’s medical bills.
The annual exclusion amount for gifts is periodically adjusted for inflation but adjustments do not happen every year. For example, the $14,000 exclusion amount for gifts for 2017 is the same as it was in 2016.
Before making a gift of real estate or other property, make sure you consult with us to be sure you’ve considered all of the consequences of that gift.